Orinoco Gold Limited ASX:OGX

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Development of Orinoco’s 70% held Cascavel Gold Project in Brazil is well advanced. However hold-ups in customs clearances have delayed the expected start-up by 4-5 months, with commissioning now expected in the second half of June. All plant has now been delivered to site, with final construction underway.

Despite the construction delays to the surface plant, the Company has continued to advance its underground development, and now has some three months of ore ready for stoping when plant commissioning is complete. The development work has confirmed the geometry, continuity and grade of the mineralisation, with the expected diluted production grade of ~20g/t Au supported by some very high grades in the development sampling.

Results of drilling at Sertão have supported the interpretation that the mineralisation is similar to that at Cascavel, hosted in parallel shoots within an overall gently dipping mineralised thrust – one shoot has now been intersected for 1,600m down plunge, and thus Sertão could be a potential future mining operation. Near mine exploration at Cascavel also continues to return very encouraging results.

Given the above we continue to rate Orinoco a SPECULATIVE BUY, with a revised base case price target of $0.27/share. Short to medium term price movers will include demonstrated production at target levels, exploration success and gold price movements. We see considerable upside potential to our valuation.

Orinoco is an ASX-listed company concentrating efforts on orogenic gold mineralisation in the highly prospective Goiás region of central Brazil. The key
development project is the Cascavel Gold Project, part of its broader Faina Goldfields Project, which covers some 300km2 of greenstone units.

The Company’s strategy is to initially develop a relatively small scale, start-up operation, with plans to then increase resources and mine life by funding
drilling and other exploration activities from operational cash flow.

Orinoco, for which Breakaway initiated coverage in March 2015, is concentrating activities on its Faina Goldfields Project, located approximately 350km
west of Brasilia in the State of Goiás in central Brazil. The state produced 27.4% of Brazil’s 2013 gold production of around 2.3Moz, and current significant
operations include AngloGold Ashanti’s Crixas and Yamana’s Pilar mines...